Answer: According to the Millennial Housing Commission
createdby Congress, few lenders are willing to administer
home improvement loans. Most prefer to make home equity
loans or unsecured consumer loans because they are easier
to manage. Home improvement loans usually require
inspections and irregular draws on the loan amount as work
is completed, which forces regional or national lenders to
find local partners to provide oversight.
Financing repairs and improvements
with home equity is okay for most
homeowners, but it difficult for many
first-time buyers. They have lower-
incomes, smaller savings, and have
made lower down payments on their
homes than first-time buyers a decade
ago. So they have little equity to
borrow against. Unfortunately, it is
often lower cost older homes
purchased by first-time buyers that
need the most work.
Unless you have a cash reserve, you will have to shop around
for the best borrowing terms. In addition to the options
listed above, you can ask relatives for a loan. Borrow against
your whole life insurance policy. Refinance your existing
mortgage. Get a second mortgage. Contact the government
about home improvement programs. And – only as a last
resort – borrow from a finance agency, which generally tend
to charge higher rates.
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